ANSWERS: 1
  • It is very useful because you can know what to expect in terms of the demand of your product, if you make a variation in the price. "Price elasticity of demand" is the percentage of change in demand given a variation in the price. A product is "elastic" if when the price goes up, the sales go down. Or of course if the price goes down, the sales go up. On the contrary is "inelastic", if when the price goes up, the sales are the same or better. If you as a marketer know that (because of market research, sales analysis over time, etc.) that you have an "elastic" product you have to be very careful with price changes, that will immediatly impact on your sales. On the other hand, if you have an "inelastic" product you can make price changes easily, being of course responsible, because most of the time this products are for basic survival, or belong to monopolies. An "inelastic" product is gasoline (fuel) in spite of drastic price changes, demand remains almost the same. There are also "snob" products which elasticity is directly proportional, meaning that the higher price the higher sales. Examples are some jewelry, and some exclusive discotheques and clubs. Hope my answer helps!

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